How to create Bill of Material for a stock item @ Tally.ERP9

Query

What is Bill of Material? How to create Bill of Material for a Stock Item?

Answer

A Bill of Materials is a list of constituent items along with quantity details that can be allotted for the manufacture of a certain product, by-product or likewise. This facilitates immediate reduction in stock of the item automatically. This process of listing the items that make up another item is made possible in Tally by enabling the Bill of Materials feature.

Bill of Material (BoM) is created only for those items that are being assembled in-house. Therefore, you need to specify a BoM at the time of creating a Stock Item or while altering the stock item. For trading items, you do not need a BoM.

Bill of Material (BoM) feature is useful for manufacturing organisations and can be setup through F12: Configure.

To setup Bill of Materials

Go to Gateway of Tally > F12: Configure > select Accts/Inventory Info. > set Allow Component list details (Bill of Materials) to Yes

OR

Go to Gateway of Tally > Inventory Info > Stock Items > Create > Press F12: Configure (Stock Item Configuration) and set Allow Component List Details (Bill of Materials) to Yes.

For a Stock Item, you can create

• A Single BOM
• Multiple BOM
• Single/Multiple BOM with Component Type

Creating Single Bill Of Material for a Stock Item

Single BOM can be created for a stock item where you use standard set of inputs to manufacture finished goods.

Let us create a new Stock Item Television and specify BoM.

Go to Gateway of Tally > Inventory Info. > Stock Items > Create

In Stock Item Creation screen

• Enter the Stock Item Name, select the appropriate stock group and specify the appropriate unit of measurement in Unit field
• Set Component List: To create the component list required to manufacture the Finished goods enable this option to Yes

Note: The Set Components (BOM) option will not displayed in Stock Item master on enabling the configuration option Allow Component list details (Bill of Material), this option will display in item master only on entering/ specifying the unit of measure in the Units field.

• Press Enter to view Stock Item Multi Components (M BOM) screen
• In Stock Item Multi Components screen
• Under Name of BOM specify component list Name - BOM 1 and press enter to view Stock Item Components (BOM) screen

• In Stock Item Components (BOM) screen
• BOM Name: By default the BOM Name specified in Stock Item Multi Components (M BOM) screen will be defaulted and application will not allow to move the cursor to BOM Name field.
• Components of: In this field application displays the Name of the Stock Item for which the components are defined.
• Unit of Manufacture: Specify the appropriate number of finished product that will be manufactured by using the components identified in the component list.
• Item: In this field identify the raw materials which are required to manufacture the finished goods

Note: If Maintain Multiple Godown feature is enabled in F11: Features (Inventory Features) the godown option will also be displayed in Stock Item Component screen.

• Quantity: In this field mention the quantity of Raw Material required to manufacture the finished goods.

Observe to create 1 Computer we require 6 different inputs. The Quantity of inputs consumed to manufacturer finished goods is 1 each of 6 different inputs.

Specify other required details in the stock item master and accept the screen.

Creating Multiple Bill of Material for a Stock Item

Multiple BOM can be created for a stock items where you use varying set of components to manufacture a specific finished goods based on the availability of goods or customer requirements.

The facility to create Multiple Bill of Materials for Stock Item has been provided in Tally.ERP 9 Release 3.0. Where you can create multiple BOM withdifferent component list for a stock item & appropriate BOM can be selected in the manufacturing Voucher.

This feature will be useful where you are using different components to manufacture the same stock item based on the customer requirement

Example: Customer X wants Computer to be manufactured with specific brand of Monitor. Whereas other customers has not specified any such specifications. In this scenario ABC company needs 2 BOM, one for Customer X as per his component specification & other may be a standard BOM for all other customers.

To create multiple Bill of Material

Go to Gateway of Tally > Inventory Info. > Stock Items > Create

In Stock Item Creation screen

• Enter the Stock Item Name, select the appropriate stock group and specify the appropriate unit of measurement in Unit field
• Set Component List: To create the component list required to manufacture the Finished goods enable this option to Yes and press Enter to view Stock Item Multi Components (M BOM) screen
• In Stock Item Multi Components (M BOM) screen
• Under Name of BOM specify component list name - Customer X and press enter to view Stock Item Components (BOM) screen

If BOM is specifically created for a specific customer/sale you can enter the customer or sale name in Name of BOM field to identify the BOM while recording manufacturing transaction.

• In Stock Item Components (BOM) screen
• BOM Name: By default the BOM Name specified in Stock Item Multi Components (M BOM) screen will be defaulted and application will not allow to move the cursor to BOM Name field.
• Components of: In this field application displays the Name of the Stock Item for which the components are defined.
• Unit of Manufacture: Specify the appropriate number of finished product that will be manufactured by using the components identified in the component list.
• Item: In this field identify the raw materials which are required to manufacture the finished goods
• Quantity: In this field mention the quantity of Raw Material required to manufacture the finished goods.

• Press Enter to save the Stock Item components for BOM - Customer X and to view Stock Item Multi Component screen
• In Stock Item Multi Component screen enter the second Bill of Material name - Standard BOM in Name of BOM field
• In Stock Item Components (BOM) screen specify the Unit of Manufacture, Item, Godown and Quantity details as shown

Note: In the above scenario for Stock item - Computer we have created 2 BOM. Similarly you can create multiple BOM with different component list for the stock items.

Creating Single/Multiple Bill Of Material with Component Type

In some of the manufacturing processes along with the finished goods Co-Products or By-Products or Scrap may be produced.

In this scenario while defining the BOM for the Finished goods, you may want to identify the inputs which are consumed to manufacture Finished goods & theBy-Products /Co-Products/ Scrap manufactured.

Now in Tally.ERP 9 Release 3.0, you can create the BOM by selecting & identifying the components as consumption, By-Product/Co-Product/ Scrap.

Let us take the case of manufacture of Sugar and create the BOM for the stock Item

To create Bill of Material with Nature of Item

Go to Gateway of Tally > Inventory Info. > Stock Items > Create

In Stock Item Creation screen

1. Enter the Stock Item Name, select the appropriate Stock Group and specify the appropriate Unit of Measurement in Unit field

2. Set Component List: To create the component list required to manufacture the Finished Goods enable this option to Yes and press Enter to view Stock Item Multi Components (M BOM) screen

3. In Stock Item Multi Components (M BOM) screen

• Under Name of BOM specify component list Name as - BOM - 1

4. In Stock Item Components (BOM) screen,

Set up:

• In F12: Configuration, enable the option Define Type of Component for BOM to Yes

On enabling the configuration option Define Type of Component for BOM in Stock Item Components (BOM) screen a new column Component Type will be displayed.

• BOM Name: By default the BOM Name specified in Stock Item Multi Components (M BOM) screen will be defaulted and application will not allow to move the cursor to BOM Name field.
• Components of: In this field application displays the Name of the Stock Item for which the components are defined.
• Unit of Manufacture: Specify the appropriate number of finished product that will be manufactured by using the components identified in the component list.
• Item: In this field identify the raw materials which are required to manufacture the finished goods
• Component Type: In this field select the appropriate type for the component selected.
• By-Product: Select this classification for the stock items which are produced as By-Product of finished goods
• Component: Select this classification for the Raw materials /inputs which are used or consumed for the production of finished goods.
• Co-Product: Select this classification for the stock items which are produced as Co-product of finished goods
• Scrap: Select this classification for the stock item produced as scrap in the process of manufacture of finished goods.

• Quantity: In this field mention the quantity of Raw Material required to manufacture the finished goods or the Co- Products/ By-Products /scrap manufactured.

Note: Cursor will not move to Rate (%) column when the Component Type selected is Consumption.

• Rate (%): In this field you can specify the percentage of cost of components to be considered to determine the cost of production of Co-products/By-Products/Scrap.

Note: If the Component Type selected is Co-product/By-Product or Scrap, cursor will move to Rate (%) column to define the percentage of cost of production of Co-product/By-Product or Scrap.

The completed Stock Item Component (BOM) screen for Stock Item - Sugar appears as shown

Observe to manufacture Sugar, Sugar Cane & Lime are identified as Raw materials (Consumption). Bagasse & Molasses are identified as By-Products.

Note: When the Manufacturing Journal is recorded to account the manufacture of Sugar using the above created BOM the stock items identified asConsumptions will be displayed under Components (Consumption) section. The stock items identified as Co-Product/By-Product or Scrap will be displayed under Co-Products/By-Products/Scrap section

5. Press Enter to save the Stock Item components for BOM - 1 and to view Stock Item Multi Component screen. If required you can create the second BOM for the stock Item.